S E P T E M B E R 2 0 1 3

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TABLE OF CONTENTS

o Overview ........................................................................................................................................................ 2

o Components of Medicaid Global Spending Cap ............................................................................................ 3

o Results through September 2013 – Summary & Variance Highlights .......................................................... 4

o Accounts Receivable ..................................................................................................................................... 5

o Office of Health Insurance Programs (OHIP) Budget .................................................................................... 6

o Enrollment .................................................................................................................................................... 7

o Beneficiary Transition Schedule to Managed Care ...................................................................................... 7

o Appendices:

A. Inventory of Rate Packages ............................................................................................................. 9

B. Bending The Cost Curve .................................................................................................................. 10

C. Annual Online and Offline Budget .................................................................................................. 11

D. FY 2014 Savings Initiatives ............................................................................................................. 12

E. Regional Spending Data ................................................................................................................. 13

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Overview

The FY 2014 Enacted Budget extended the Medicaid Global Spending Cap through March 2015. Pursuant to legislation,

the Medicaid Global Spending Cap will increase from $15.9 billion to $16.4 billion in FY 2014, roughly 3.2 percent. The CPI

used on Medicaid services subject to the trend was 3.9 percent (ten year average of the Medical Care Consumer Price

Index), however there were several adjustments made to the Global Cap target that are not subject to the trend. The

most significant were the return of Monroe County in local county contributions and the inclusion of OHIP State

Operations costs previously budgeted outside of the Medicaid Global Spending Cap. The annual growth in the Global Cap

of $510 million over last year includes costs associated with both price and enrollment increases, offset by a net change in

one time revenue and spending actions as well as the continuation of Medicaid Redesign Team (MRT) initiatives.

Components of the annual growth are as follows:

Additionally, as part of the legislation passed with the Enacted Budget, the following major initiatives were included for

the Medicaid program:

o Advances Care Management for All - This initiative transitions Medicaid enrollees to care management. There

are a number of populations and benefits scheduled to transition into the managed care setting this fiscal year,

which are all described in further detail later in this report. See Beneficiary Transition Schedule to Managed

Care section (page 7).

o Balance Incentive Program (BIP) - BIP is a provision of the Affordable Care Act (ACA) which provides additional

federal funding to implement structural changes that are believed to best facilitate rebalancing the percentage of

individuals in need of long term supports and services in home and community based settings as opposed to

institutional settings. For additional information regarding BIP please visit:

http://www.health.ny.gov/health_care/medicaid/redesign/balancing_incentive_program.htm.

Price (+$436 million)

Price includes managed care premium adjustments for cost trends and newly covered benefits, as well as fee-for-service rate adjustments. See Appendix A for more detail.

Utilization (+$130 million)

Utilization reflects the annualization of FY 2013 net enrollment growth (108,300 recipients) as well as assumed new enrollment for FY 2014 (127,000 recipients).

MRT/One-Timers/Other (-$56 million)

MRT/Other primarily includes an increase of $190 million in local county contributions reflecting the return of Monroe County to the program offset by lower than expected rebates due to the shift of drugs from brand to generic.

http://www.health.ny.gov/health_care/medicaid/redesign/balancing_incentive_program.htm

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o Family Health Plus Wrap - Allows Family Health Plus enrollees to move to the New York Health Benefit Exchange

or to a Qualified Health Plan. This provides enrollees with benefits currently not received under Family Health

Plus. State funds are provided to cover any additional costs associated with premiums.

Lastly, as part of the Enacted Budget, the State partnered with the entire health care community to develop a

comprehensive solution to solve the loss of $1.1 billion of annual Federal Medicaid revenue for developmental disability

services. The solution was in large part driven by the success of the MRT. A significant portion, $200 million, was

achieved by underspending in FY 2013 which was used to fund expenses that would have otherwise occurred in FY 2014.

In addition, roughly $124 million is expected as a result of accelerating MRT initiatives, (i.e., Patient Centered Medical

Homes, stricter utilization management, MLTC enrollment acceleration, etc.) and implementing other reform measures

(i.e., Medicaid managed care efficiencies, increasing the manual review of fee for service claims, and Accounts Receivable

recoveries, etc.). In total, the solution consists of various State actions ($500 million) as well as additional federal revenue

initiatives and other sources ($600 million). Of this amount, $730 million in resources are required to be transferred from

the Medicaid Global Spending Cap to stabilize Mental Hygiene funding.

It was initially the State’s goal to restore the 2 percent Across the Board (ATB) reductions in the Enacted Budget; however

this was not possible given the budgetary constraints on resources under the Medicaid Global Spending Cap. The

Department will continue to look for opportunities to mitigate the 2 percent ATB reduction to the extent resources

become available.

Components of the Medicaid Global Spending Cap

The Global Cap is comprised of spending for fee-

for-service categories (hospitals, nursing homes,

clinics, other long term care providers, and non-

institutional related costs), managed care plans

(mainstream and long term), Family Health Plus

payments and all other (Medicaid

administration, OHIP budget, transfers from

other State agencies). This spending is offset by

local government funding as well as Medicaid

audit recoveries, accounts receivable

recoupments, and the two percent across-the-

board reductions. See Appendix C for the

annual budget by category of service.

Managed Care $12.4

Fee For Service

$9.7

All Other $1.7

FY 2014 Global Cap Breakout (dollars in billions)

NOTE: This chart represents the projected non-federal share of Medicaid spending for this fiscal year. $23.8 billion of Medicaid State services are funded by $16.4 billion in the Medicaid Global Spending Cap and $7.4 billion from local contributions.

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Results through September 2013 - Summary

Total State Medicaid expenditures under the Medicaid Global Spending Cap for FY 2014 through September are $47

million or 0.6 percent under projections. Spending for the month of September resulted in total expenditures of $8.187

billion compared to the projection of $8.234 billion.

Medicaid Spending FY 2014 - September (dollars in millions)

Category of Service Estimated Actual Variance

Over / (Under)

Total Fee For Service $5,184 $5,132 ($52)

Inpatient $1,440 $1,426 ($14)

Outpatient/Emergency Room $256 $232 ($24)

Clinic $329 $364 $35

Nursing Homes $1,695 $1,691 ($4)

Other Long Term Care $633 $607 ($26)

Non-Institutional $831 $812 ($19)

Medicaid Managed Care $5,417 $5,431 $14

Family Health Plus $472 $465 ($7)

Medicaid Administration Costs $259 $239 ($20)

Medicaid Audits ($326) ($334) ($8)

OHIP Budget / State Operations $51 $52 $1

All Other $923 $948 $25

Local Funding Offset ($3,746) ($3,746) $0

TOTAL $8,234 $8,187 ($47)

Results through September - Variance Highlights

o Lower Fee-for-Service Spending: Medicaid spending in major fee-for-service categories was $52 million under projections, 1.0 percent.

Outpatient/Emergency Room spending was close to 9 percent under projections through September.

The average payment per claim for the month of September was significantly lower than projections,

roughly 6 percent. The price projections were based on average actual cost per service experience in

October 2012. The price discrepancy may be the result of seasonal changes in services.

Clinic spending through September was 11 percent over projections. This is largely attributable to

increases in the volume and price of mental hygiene services, which were 20 percent higher than

anticipated through September. Price projections were based on average actual cost per service

experience in October of 2012, with volume projections being based on average per cycle claims over

the last 6 months (October 2012-March 2013) of FY 2013. Starting in May, the State began

reprocessing OMH claims with dates of service between October 1, 2010 and August 31, 2013 to

reflect revised APG rate codes. This process is anticipated to take 33 weeks to complete, upon which

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the original claims will be reversed. Therefore, the higher spending related to the reprocessing is

expected to be recovered during the remainder of the year.

Other Long Term Care spending through September was 4 percent lower than projections. The

variance is primarily driven by the personal care and home health care programs. The difference

appears to be related to the transition of the targeted fee-for-service populations into the Managed

Long Term Care (MLTC) program. The movement of New York City and downstate community based

long term care recipients out of the fee-for-service programs has significantly reduced the average

rates. The DOH/DOB will continue to monitor the movement of fee-for-service populations into a

managed care setting and evaluate its effect on payment rates.

o Medicaid Managed Care Spending: Through September, mainstream Managed Care and MLTC spending were

$14 million, 0.2 percent, above projections. The variance is primarily driven by the number of recipients enrolled

in the MLTC program. Enrollment through September was slightly greater (roughly 2,000) than anticipated

resulting in a variance of roughly $28 million over projections. This is likely the result of a quicker transition of the

targeted fee-for-service populations to MLTC plans.

o Medicaid Administration Costs: Medicaid Administration costs were $20 million below projections in

September, reflecting efficiencies achieved through the continued efforts of the State takeover of the

administration of the Medicaid program.

o OHIP Budget / State Operations: Through September, OHIP Budget / State Operations costs were on target

with estimates. The Division of the Budget has made appropriate adjustments to capture the contractual

services costs that previously had not been correctly charged to the Medicaid Cap due to changes in the

Statewide Insurance System associated with consolidating the program under Medicaid as part of the FY

2014 Budget.

Accounts Receivable

The accounts receivable balance for retroactive rates owed to the State through the end of September was $234 million.

This reflects a reduction of $166 million since April 2013, and represents the net impact of recoupments from Medicaid

providers offset by retroactive rate adjustments released during this fiscal year.

Currently, Medicaid checks issued to providers that are subject to negative retroactive rate adjustments are automatically

reduced by a minimum of 15 percent until the liability has been recouped. Should the amount owed not be fully repaid

before 10 weekly Medicaid cycles, simple interest at the rate of prime plus two percent (currently 5.25 percent) would be

assessed on any unpaid balance and accumulate on a weekly basis. Collection of the interest assessed commences as

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$0

$50

$100

$150

$200

Personal Services Non-PersonalServices

$29

$162

$14 $38

Mill

ion

s

Budget

Spending To Date

FY 2014 OHIP Budget (dollars in millions)

soon as the principal amount owed has been fully repaid. With the migration to managed care, the State’s ability to

recover outstanding A/R balances becomes more complicated as the State’s Medicaid costs will be primarily premium

based. As a result, an A/R recovery program was designed. The goal of the program is to recoup all outstanding A/R

balances within a two year period. In order to accomplish this, DOH will modify its collection process by offering several

repayment options to all providers with outstanding A/R liabilities. As a result of this program, the Department has

received roughly $50 million to date from close to 40 providers that have opted to pay off all outstanding A/R liabilities to

avoid all interest costs incurred.

The Department will continue to work collectively with the hospitals, nursing homes, and home care providers during the

next State Fiscal Year asking for voluntary payment of outstanding liabilities as a means to avoid interest costs and help

mitigate the adverse impact of outstanding receivable balances on the Medicaid Global Spending Cap. The Department

will continue to closely monitor the accounts receivable balances each month.

Office of Health Insurance Programs (OHIP) Budget

The FY 2014 Enacted Budget consolidated the Medicaid

State Operations budget within the Global Cap. This

change more appropriately aligns operational resources

with programmatic responsibilities, and provides flexibility

in administering and implementing MRT initiatives more

effectively. The State Operations budget reflects the non-

federal share only and includes personal services costs (i.e.,

salaries of OHIP staff that work on the Medicaid budget) as

well as non-personal services costs (i.e., contractual

services). Contracts for the Enrollment Center, Medicaid

Management Information Systems (MMIS), transportation

management, and various MRT initiatives comprise 80

percent ($128 million) of the total non-personal service budget. The chart compares State Operations spending to date

against the annual OHIP budget target.

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Enrollment

Medicaid total enrollment reached 5,386,281 enrollees at the end of September 2013. This reflects an increase of 135,203

enrollees, or 2.6 percent, since March 2013. Medicaid managed care enrollment in September 2013 (includes FHP and

Managed LTC) reached 4,054,974 enrollees, an increase of 118,543 enrollees, or 3.0 percent, since March 2013. Below is

a detailed breakout by program and region:

NYS Medicaid Enrollment Summary

FY 2014

March 2013 September 2013 Increase / (Decrease)

% Change

Managed Care 3,936,431 4,054,974 118,543 3.0%

New York City 2,574,775 2,616,527 41,752 1.6%

Rest of State 1,361,656 1,438,447 76,791 5.6%

Fee-For-Service 1,314,647 1,331,307 16,660 1.3%

New York City 626,980 653,535 26,555 4.2%

Rest of State 687,667 677,772 (9,895) -1.4%

TOTAL 5,251,078 5,386,281 135,203 2.6%

New York City 3,201,755 3,270,062 68,307 2.1%

Rest of State 2,049,323 2,116,219 66,896 3.3% NOTE: Most current four months counts are adjusted by lag factors (2.92%, 0.94%, 0.43% and 0.15%, respectively to account for retroactive eligibility determinations)

More detailed information on enrollment can be found in the NYS OHIP Medicaid Monthly Enrollment Report on the

Department of Health’s website at: http://www.health.ny.gov/health_care/managed_care/reports/index.htm.

Beneficiary Transition Schedule to Managed Care

Care Management for All was a key component of the MRT’s recommendations intended to improve benefit

coordination, quality of care, and patient outcomes over the full range of health care, including mental health, substance

abuse, developmental disability, and physical health care services. It will also redirect almost all Medicaid spending in the

State from fee-for-service to care management. The care management system currently in place includes comprehensive

plans, HIV/AIDS special needs plans, partial capitation long term care plans, and Medicare/Medicaid supplemental plans.

As Care Management for All progresses, additional plans tailored to meet the needs of the transitioning population will be

added, including mental health and substance abuse special needs plans, and fully integrated plans for

Medicare/Medicaid “dual eligibles”. The charts below outline the list of recipients and benefits scheduled to transition

into the care management setting during this fiscal year:

http://www.health.ny.gov/health_care/managed_care/reports/index.htm

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Schedule for Medicaid Fee for Service Transition to Managed Care (Populations) FY 2014

Projected Phase-in

Recipients Duals / Non

Duals

# of Targeted

Enrollees*

Enrolled To Date

7/12 to 9/13 NYC Community Based Long Term Care (LTC) Duals 34,071 23,847

4/13 to 9/13 Local District Social Service Placed Foster Care Children Non Duals 3,756 471

6/13 to 11/13 Downstate Community Based LTC in Nassau, Suffolk, Westchester counties

Duals 6,400 1,945

6/13 to 11/13 Individuals in LTHHCP Both 2,233 1,131

7/13 to 12/13 Medicaid Buy-In Working Disabled Non Duals 266 96

9/13 to 2/14 Community Based LTC in Orange and Rockland counties Duals 685 73

1/14 to 6/14 Community Based LTC in Upstate counties Duals 3,087 160

*NOTE: The targeted enrollees were defined using October 2011 eligibility information. Some of these targeted enrollees may no longer be participating in the program or may have moved to different levels of care and as a result will not be shifting.

Schedule for Medicaid Fee for Service Transition to Managed Care (Service Benefits) FY 2014

Effective Date

Service Benefits

August 2013

Adult Day Health Care

AIDS Adult Day Health Care

Directly Observed Therapy for Tuberculosis

October 2013 Hospice Program

January 2014 Nursing Home

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Appendix A Inventory of Rate Packages

The State is anticipating Medicaid rate adjustments resulting in price increases of up to $436 million this fiscal year.

Below is a list of the majority of anticipated rate packages to be implemented:

Category of Service Rate Package Description Projected Effective Date

Inpatient

Acute and Exempt Unit Rates January, April, October 2010 January, April, October 2011 January 2012

Psychiatric Rates January 2010

Hurricane Sandy Providers (Psychiatric rates; Graduate Medical Education rates; April 2012 Inpatient rates)

2009-2012

Outpatient

Ambulatory Patient Group (APG) rates

2009-2012

Public/Non-Public APG rates July 2013

Hurricane Sandy Providers (APG and Home Health Aides)

January 2009 December 2012

Clinic

APG Capital rates 2009-2011

Electronic Health Records (EHRs) distribution

October 2008 October 2009

Nursing Homes Case Mix Adjustments July 2012

Personal Care Central Insurance Program (CIP) NYC providers

April 2013

Managed Long Term Care

FY 2013 Health Recruitment and Retention (HR&R) awards

July 2012

NYC community based LTC mandatory transition rates-phase I

July 2012

FY 2014 HR&R awards July 2013

Medicaid Managed Care

April 2013 rates April 2013

July 2013 rates July 2013

October 2013 rates October 2013

January 2014 rates January 2014

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Appendix B Bending the Cost Curve

NOTE: The number of recipients equals the sum of all unique recipients that received a Medicaid service within the fiscal year.

NY Total Medicaid Spending Statewide for All Categories of Service Excludes State Operations (2003-2012)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Total Medicaid Spending

$32.6B $35.2B $36.9B $36.5B $37.7B $39.4B $41.7B $43.7B $44.6B $43.9B

# of Recipients 4,266,535 4,593,566 4,732,563 4,729,166 4,621,909 4,656,354 4,910,511 5,211,511 5,396,521 5,578,143

Cost per Recipient

$7,635 $7,658 $7,787 $7,710 $8,158 $8,464 $8,493 $8,379 $8,261 $7,864

Projected Spending

Absent MRT Initiatives

$4.6 billion Estimated SavingsAggregate

Spending for all

Programs (in Billions)

2011 MRT Actions

Implemented

Year

$30

$32

$34

$36

$38

$40

$42

$44

$46

$48

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

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Appendix C Annual Online and Offline Budget

The $16.4 billion Medicaid State Funds Spending Cap can be organized into two major components, health care provider

reimbursement and other administrative, intergovernmental or revenue lines, also referred to as “offline” or occurring

outside the MMIS billing system. Health care provider spending reflects the cost of care that is attributable to certain

service sectors of the program (i.e., hospital, nursing home, managed care, etc.). These payments occur within the

Medicaid claiming system (eMedNY). Projections for most service sectors begin with FY 2013 ending recipients and

average rates per recipient. Adjustments to spending projections are then made for anticipated rate packages, transitions

of populations/benefits to the managed care setting, and any non-recurring or one-time payments. Monitoring the

movement of recipients between fee-for-service reimbursement and monthly managed care rates of payment is critical to

evaluating various health service budgets.

The second component of spending, spending outside the eMedNY billing system, reflects spending on intergovernmental

transfer payments, State and Local District Social Service administrative claims, etc. as well as receipts which offset the

State’s cost for Medicaid, for example drug manufacturer rebates or accounts receivable collections. The following table

outlines the annual Medicaid projections by major health care sector for both provider claims and other

payments/revenues.

Medicaid Global Spending Cap Annual Budget FY 2014

(dollars in millions)

Category of Service Online Offline Total

Total Fee For Service $9,309 $1,102 $10,411

Inpatient $2,343 $578 $2,921

Outpatient/Emergency Room $552 ($30) $522

Clinic $674 ($77) $597

Nursing Homes $3,373 $0 $3,373

Other Long Term Care $1,135 $30 $1,165

Non-Institutional $1,232 $601 $1,833

Managed Care $11,461 ($76) $11,385

Family Health Plus $915 $0 $915

Medicaid Administration Costs $0 $518 $518

Medicaid Audits $0 ($463) ($463)

OHIP Budget / State Operations $0 $191 $191

All Other $2,787 ($1,832) $955

Local Funding Offset $0 ($7,491) ($7,491)

TOTAL $24,472 ($8,051) $16,421

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Appendix D FY 2014 Savings Initiatives

As part of the partnership solution the following initiatives are scheduled to be implemented in this fiscal year:

FY 2014 MRT Initiatives

(dollars in millions)

Initiative Projected

Effective Date State Dollars

Accelerate MRT: Stricter Utilization Management by Transportation Manager March 2013 $6

PCMH Savings April 2013 $7

Accelerate MLTC Enrollment April 2013 $3

Implement Appropriateness Edits on emergency Medicaid Pharmacy Claims

April 2013 $2

Total $18

Other Reforms/Savings: Federal Revenue from Additional Emergency Medicaid Claiming January 2011 $250

Preschool/School Supportive Health Services Program (SSHSP) Cost Study October 2011 $120

Reduce Accounts Receivable Balances April 2013 $50

Gold STAMP Program to Reduce Pressure Ulcers April 2013 $6

Managed Care Efficiency Adjustments July 2013 $25

Increase manual review of claims July 2013 $8

Eliminate e-Prescribing Incentive July 2013 $1

Basic Benefit Enhancements October 2013 $5

Activating Ordering/Prescribing/ Referring/Attending edits October 2013 $4

Total $469

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Appendix E Regional Spending Data

The Global Cap legislation requires the Department to publish actual State Medicaid spending by region. The regions

selected are based on the Governor’s eleven economic development areas. The following link shows provider spending

that occurs within the Medicaid claiming system (eMedNY) through September 2013 for each region.

Detailed regional information can be found on the Department of Health’s website at: http://www.health.ny.gov/health_care/medicaid/regulations/global_cap/regional/index.htm.

http://www.health.ny.gov/health_care/medicaid/regulations/global_cap/regional/index.htm